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115th Congress   }                                       {  Rept. 115-453
                          HOUSE OF REPRESENTATIVES
 1st Session     }                                       {    Part 1

======================================================================



 
               IRANIAN LEADERSHIP ASSET TRANSPARENCY ACT

                                _______
                                

December 7, 2017.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 1638]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 1638) to require the Secretary of the Treasury 
to submit a report to the appropriate congressional committees 
on the estimated total assets under direct or indirect control 
by certain senior Iranian leaders and other figures, and for 
other purposes, having considered the same, report favorably 
thereon with an amendment and recommend that the bill as 
amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Iranian Leadership Asset Transparency 
Act''.

SEC. 2. FINDINGS.

  The Congress finds the following:
          (1) Iran is characterized by high levels of official and 
        institutional corruption, and substantial involvement by Iran's 
        security forces, particularly the Islamic Revolutionary Guard 
        Corps (IRGC), in the economy.
          (2) Many members of Iran's senior political and military 
        leadership have acquired significant personal and institutional 
        wealth by using their positions to secure control of 
        significant portions of Iran's national economy.
          (3) Sanctions relief provided through the Joint Comprehensive 
        Plan of Action has resulted in the removal of many Iranian 
        entities that are tied to governmental corruption from the list 
        of entities sanctioned by the United States.
          (4) The Department of Treasury in 2011 designated the Islamic 
        Republic of Iran's financial sector as a jurisdiction of 
        primary money laundering concern under section 311 of the USA 
        PATRIOT Act, stating ``Treasury has for the first time 
        identified the entire Iranian financial sector; including 
        Iran's Central Bank, private Iranian banks, and branches, and 
        subsidiaries of Iranian banks operating outside of Iran as 
        posing illicit finance risks for the global financial 
        system.''.
          (5) Iran continues to be listed by the Financial Action Task 
        Force (FATF) among the ``Non-Cooperative Countries or 
        Territories''--countries which it perceived to be non-
        cooperative in the global fight against terror finance and 
        money laundering.
          (6) Iran and North Korea are the only countries listed by the 
        FATF as ``Non-Cooperative Countries or Territories'' against 
        which FATF countries should take measures.
          (7) The Transparency International index of perceived public 
        corruption ranks Iran 130th out of 168 countries surveyed.
          (8) The State Department identified Iran as a ``major money-
        laundering country'' in its International Narcotics Control 
        Strategy Report (INCSR) for 2016.
          (9) The State Department currently identifies Iran, along 
        with Sudan and Syria, as a state sponsor of terrorism, ``having 
        repeatedly provided support for acts of international 
        terrorism''.
          (10) The State Department's ``Country Reports on Terrorism'', 
        published last in July 2017, noted that ``Iran continued to 
        sponsor terrorist groups around the world, principally through 
        its Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF). 
        These groups included Lebanese Hizballah, several Iraqi Shia 
        militant groups, Hamas, and Palestine Islamic Jihad. Iran, 
        Hizballah, and other Shia militia continued to provide support 
        to the Asad regime, dramatically bolstering its capabilities, 
        prolonging the civil war in Syria, and worsening the human 
        rights and refugee crisis there.''.
          (11) The Iranian Government's tolerance of corruption and 
        nepotism in business limits opportunities for foreign and 
        domestic investment, particularly given the significant 
        involvement of the IRGC in many sectors of Iran's economy.
          (12) The IRGC and the leadership-controlled bonyads 
        (foundations) control an estimated one-third of Iran's total 
        economy, including large portions of Iran's telecommunications, 
        construction, and airport and port operations. These operations 
        give the IRGC and bonyads vast funds to support terrorist 
        organizations such as Hezbollah and Hamas.
          (13) By gaining control of major economic sectors, the IRGC 
        and bonyads have also served to further disadvantage the 
        average Iranian.

SEC. 3. REPORT REQUIREMENT RELATING TO ASSETS OF IRANIAN LEADERS AND 
                    CERTAIN SENIOR POLITICAL FIGURES.

  (a) In General.--Not later than 270 days after the date of enactment 
of this Act, and annually thereafter (or more frequently if the 
Secretary of the Treasury determines it appropriate based on new 
information received by the Secretary) for the following 2 years, the 
Secretary of the Treasury shall, in furtherance of the Secretary's 
efforts to prevent the financing of terrorism, money laundering, or 
related illicit finance and to make financial institutions' required 
compliance with remaining sanctions more easily understood, submit a 
report to the appropriate congressional committees containing--
          (1) the estimated total funds or assets held in accounts at 
        U.S. and foreign financial institutions that are under direct 
        or indirect control by each natural person described in 
        subsection (b) and a description of such assets;
          (2) an identification of any equity stake such natural person 
        has in an entity on the Department of the Treasury's list of 
        Specially Designated Nationals or in any other sanctioned 
        entity;
          (3) a description of how such funds or assets or equity 
        interests were acquired, and how they have been used or 
        employed;
          (4) a description of any new methods or techniques used to 
        evade anti-money laundering and related laws, including 
        recommendations to improve techniques to combat illicit uses of 
        the U.S. financial system by each natural person described in 
        subsection (b);
          (5) recommendations for how U.S. economic sanctions against 
        Iran may be revised to prevent the funds or assets described 
        under this subsection from being used by the natural persons 
        described in subsection (b) to contribute to the continued 
        development, testing, and procurement of ballistic missile 
        technology by Iran;
          (6) a description of how the Department of the Treasury 
        assesses the impact and effectiveness of U.S. economic 
        sanctions programs against Iran; and
          (7) recommendations for improving the ability of the 
        Department of the Treasury to rapidly and effectively develop, 
        implement, and enforce additional economic sanctions against 
        Iran if so ordered by the President under the International 
        Emergency Economic Powers Act or other corresponding 
        legislation.
  (b) Persons Described.--The natural persons described in this 
subsection are the following:
          (1) The Supreme Leader of Iran.
          (2) The President of Iran.
          (3) Members of the Council of Guardians.
          (4) Members of the Expediency Council.
          (5) The Minister of Intelligence and Security.
          (6) The Commander and the Deputy Commander of the IRGC.
          (7) The Commander and the Deputy Commander of the IRGC Ground 
        Forces.
          (8) The Commander and the Deputy Commander of the IRGC 
        Aerospace Force.
          (9) The Commander and the Deputy Commander of the IRGC Navy.
          (10) The Commander of the Basij-e-Mostaz'afin.
          (11) The Commander of the Qods Force.
          (12) The Commander in Chief of the Police Force.
          (13) The head of the IRGC Joint Staff.
          (14) The Commander of the IRGC Intelligence.
          (15) The head of the IRGC Imam Hussein University.
          (16) The Supreme Leader's Representative at the IRGC.
          (17) The Chief Executive Officer and the Chairman of the IRGC 
        Cooperative Foundation.
          (18) The Commander of the Khatam-al-Anbia Construction Head 
        Quarter.
          (19) The Chief Executive Officer of the Basij Cooperative 
        Foundation.
          (20) The head of the Political Bureau of the IRGC.
          (21) The head of the Atomic Energy Organization of Iran.
  (c) Form of Report; Public Availability.--
          (1) Form.--The report required under subsection (a) shall be 
        submitted in unclassified form but may contain a classified 
        annex.
          (2) Public availability.--The unclassified portion of such 
        report shall be made available to the public and posted on the 
        website of the Department of the Treasury--
                  (A) in English, Farsi, Arabic, and Azeri; and
                  (B) in precompressed, easily downloadable versions 
                that are made available in all appropriate formats.
  (d) Sources of Information.--In preparing a report described under 
subsection (a), the Secretary of the Treasury may use any credible 
publication, database, web-based resource, public information compiled 
by any government agency, and any information collected or compiled by 
a nongovernmental organization or other entity provided to or made 
available to the Secretary, that the Secretary finds credible.
  (e) Definitions.--For purposes of this section:
          (1) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means the Committees 
        on Financial Services and Foreign Affairs of the House of 
        Representatives and the Committees on Banking, Housing, and 
        Urban Affairs and Foreign Relations of the Senate.
          (2) Funds.--The term ``funds'' means--
                  (A) cash;
                  (B) equity;
                  (C) any other intangible asset whose value is derived 
                from a contractual claim, including bank deposits, 
                bonds, stocks, a security as defined in section 2(a) of 
                the Securities Act of 1933 (15 U.S.C. 77b(a)), or a 
                security or an equity security as defined in section 
                3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
                78c(a)); and
                  (D) anything else that the Secretary determines 
                appropriate.

SEC. 4. SENSE OF CONGRESS.

  It is the sense of Congress that in preparing the reports required 
under section 3, the Secretary of the Treasury should consider 
acquiring information from sources that--
          (1) collect and, if necessary, translate high-veracity, 
        official records; or
          (2) provide search and analysis tools that enable law 
        enforcement to have new insights into commercial and financial 
        relationships.

                          PURPOSE AND SUMMARY

    On March 20, 2017, Representative Bruce Poliquin introduced 
H.R. 1638, the ``Iranian Leadership Asset Transparency Act'' 
which requires the Secretary of the Treasury to report to 
Congress on the assets held by Iran's most senior political, 
military and business leaders, and on the probable sources and 
uses of the assets. The legislation would require the Treasury 
Department to publish a public version of the report on its 
website, in English and in the major languages used within 
Iran. A classified version, if necessary, would be available to 
Congress. The legislation also contains a ``Sense of Congress'' 
that urges the Secretary of the Treasury to seek information 
for the report from sources that would search and, if 
necessary, translate publicly available ``high-veracity 
official records'' overseas, and provide methods to search and 
analyze such data in ways that are useful to law enforcement.

                  BACKGROUND AND NEED FOR LEGISLATION

    The goal of H.R. 1638 is to assist in efforts to stop money 
laundering, the financing of terror, and related illicit 
finance, by making it easier to identify and understand the 
sources and uses of vast sums of money controlled by top 
political and military leaders of Iran.
    According to the non-governmental organization (NGO) 
Transparency International, Iran's economy is characterized by 
high levels of official and institutional corruption, and by 
substantial involvement in the economy of Iran's security 
forces, particularly the Islamic Revolutionary Guard Corps 
(IRGC). Many members of Iran's senior political and military 
leadership have acquired significant personal and institutional 
wealth by using their positions to secure control of major 
portions of the Iranian economy.
    Sanctions relief provided through the Joint Comprehensive 
Plan of Action (JCPOA) resulted in the removal of many Iranian 
entities that are tied to government corruption from the list 
of entities sanctioned by the United States, although many 
remain sanctioned and the Trump Administration has, in recent 
months, levied a number of new sanctions on Iranian individuals 
and entities.
    However, the Transparency International index of perceived 
public corruption is higher than ever, and the State Department 
has identified Iran as a country of `primary concern' for money 
laundering. Separately, the U.S. Department of State has 
identified Iran as a country that has ``repeatedly provided 
support for acts of international terrorism,'' and in its June 
2016 ``country report'' noted the country ``continues to 
sponsor terrorist groups around the world, principally through 
its Islamic Revolutionary Guard Corps-Qods Force (IRGC).''
    The Iranian government's tolerance of corruption in 
business limits opportunities for individual Iranians to 
improve their lot in life, particularly given the significant 
involvement of the IRGC in many sectors of the Iranian economy. 
The `bonyads' (foundations) controlled by top Iranian political 
and military leaders control an estimated one-third of the 
total economy, including large portions of the 
telecommunications, construction, airport and seaport sectors, 
which gives the IRGC and its leaders vast funds to support 
terrorism, and terrorist proxies such as Hezbollah, at a time 
when the average Iranian citizen earns about $15,000 a year.
    The ``Iranian Leadership Asset Transparency Act'' requires 
the Treasury Department to list the known assets of senior 
Iranian officials in a form that is easily understandable and 
accessible to individual Iranians, as well as to those in the 
financial or business sector who might be concerned about 
inadvertently doing business with a corrupt Iranian entity. Any 
reports prepared under H.R. 1638 would be available in a form 
that would be accessible to the average Iranian so that they 
might better understand the nature of their nation's economy.

                                HEARINGS

    The Committee on Financial Services Subcommittee on 
Monetary Policy and Trade held a hearing examining matters 
relating to H.R. 1638 on April 4, 2017.

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
November 14, 2017, and ordered H.R. 1638 to be reported 
favorably to the House, as amended, by a recorded vote of 43 
yeas to 16 nays (Record vote no. FC-96), a quorum being 
present. Before the motion to report was offered, the Committee 
adopted an amendment in the nature of a substitute offered by 
Mr. Poliquin, by voice vote.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
sole recorded vote was on a motion by Chairman Hensarling to 
report the bill favorably to the House, as amended. The motion 
was agreed to by a recorded vote of 43 yeas to 16 nays (Record 
vote no. FC-96), a quorum being present.


                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 1638 
will assist in the combatting of money laundering, the 
financing of terror, and related illicit finance by providing 
for a public report of the assets held by, and the sources and 
uses of massive funds controlled by, the top political and 
military leaders of Iran.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                 CONGRESSIONAL BUDGET OFFICE ESTIMATES

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, December 1, 2017.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1638, the Iranian 
Leadership Asset Transparency Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                             Mark P. Hadley
                                        (For Keith Hall, Director).
    Enclosure.

H.R. 1638--Iranian Leadership Asset Transparency Act

    H.R. 1638 would require the Department of the Treasury to 
report to the Congress on the financial assets held by specific 
Iranian political and military leaders in 2018 and 2019. The 
reports would describe how their assets were acquired and any 
unclassified portions of those reports would be posted on the 
Treasury's website in multiple languages. The bill would 
require the department to provide recommendations on improving 
the effectiveness of financial sanctions against Iran.
    CBO is not aware of any comprehensive, detailed information 
regarding the financial assets of Iranian leaders. If such 
information is collected by the Office of Foreign Asset Control 
or the Office of Intelligence and Analysis in the Department of 
Treasury, or by any other federal agency, CBO expects it would 
probably be classified. Less comprehensive information about 
the assets of those Iranian leaders may be available in the 
public domain but we have not found it. However, based on the 
costs of similar reporting efforts, CBO estimates that the cost 
of compiling any information on the subject would total less 
than $500,000 in 2018 and 2019; such spending would be subject 
to the availability of appropriated funds. Costs could be 
substantially higher if this type of financial information is 
not currently collected by the federal government.
    Enacting H.R. 1638 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply. CBO 
estimates that enacting H.R. 1638 would not increase net direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2028.
    H.R. 1638 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Matthew 
Pickford. The estimate was approved by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

                       FEDERAL MANDATES STATEMENT

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995.
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of the section 
102(b)(3) of the Congressional Accountability Act.

                         EARMARK IDENTIFICATION

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    DUPLICATION OF FEDERAL PROGRAMS

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
from the Government Accountability Office to Congress pursuant 
to section 21 of Public Law 111-139; or (3) a program related 
to a program identified in the most recent Catalog of Federal 
Domestic Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

                   DISCLOSURE OF DIRECTED RULEMAKING

    Pursuant to section 3(i) of H. Res. 5, (115th Congress), 
the following statement is made concerning directed 
rulemakings: The Committee estimates that the bill requires no 
directed rulemakings within the meaning of such section.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title

    This section cites H.R. 1638 as the ``Iranian Leadership 
Asset Transparency Act''.

Section 2. Findings

    This section finds that Iran is perceived to be one of the 
most corrupt societies in the world, that a handful of top 
military and political leaders control at least a third of the 
country's wealth while the average Iranian earns about $15,000 
a year, and that the corrupt leadership of the country probably 
uses portions of its wealth to foment unrest at least through 
the Mideast if not worldwide.

Section 3. Report requirement relating to assets of Iranian leaders and 
        certain senior political figures

    This section requires the Treasury Secretary to report to 
Congress on the assets, and the sources and uses of such 
assets, held by Iran's top political and military leaders. It 
lists the senior leaders by title, and requires that a non-
classified version of such a report be posted on the Treasury 
Department's website in English and translated into the top 
three languages spoken in Iran.

Section 4. Sense of Congress

    This section expresses the sense of Congress that in 
preparing the report described in Section 3, the Secretary 
should consider acquiring information from sources that collect 
and if necessary translate ``high-veracity official records'' 
and make such data available in ways that can be searched and 
analyzed by law enforcement.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    H.R. 1638 does not repeal or amend any section of a 
statute. Therefore, the Office of Legislative Counsel did not 
prepare the report contemplated by Clause 3(e)(1)(B) of Rule 
XIII of the House of Representatives.



                             MINORITY VIEWS

    H.R. 1638, the Iranian Leadership Asset Transparency Act, 
would require the Secretary of the Treasury to report to 
Congress on the estimated total assets under direct or indirect 
control of certain senior Iranian leaders and other figures, 
along with a description of how these assets were acquired and 
are employed, regardless of whether such individuals are 
subject to U.S. sanctions.
    Although increasing transparency into corrupt regimes is a 
laudable goal, H.R. 1638 would not promote U.S. national 
security interests. First, the level of scrutiny that would be 
needed to produce a credible report would place a very real 
strain on the Treasury Department, diverting significant 
resources away from Treasury investigators who are tasked with 
targeting sanctionable conduct, implementing existing sanctions 
on Iran, and uncovering illicit conduct across the globe, 
including, importantly, efforts to identify the web of business 
interests that continue to enable North Korea to evade U.S. and 
international sanctions. Moreover, the bill's requirement to 
report on ``any equity stake'' natural persons have in certain 
entities exceeds the commonly used metric of ``controlling 
equity interest'' for identifying meaningful ownership 
interests and, thus, would add substantially to the resource 
burden associated with the report with little added value.
    The bill's required report would have little use as a 
compliance tool, given that much of the most important parts of 
the report would be classified, which notably undercuts the 
argument advanced by supporters that the legislation would help 
make ``financial institutions'' required compliance with 
remaining sanctions more easily understood.'' In fact, the 
creation of such a list that is not tied to any prohibition or 
legal action would more likely create confusion among OFAC's 
regulated public, and also mislead companies to believe that 
the Treasury list replaces the due diligence efforts that they 
should otherwise be doing prior to engaging in business in 
Iran.
    Moreover, because the report would be largely classified, 
the bill would do little to draw the Iranian public's attention 
to the corruption and unjust enrichment of their leaders, 
despite claims by the bill's proponents. And, any unclassified 
portion would inevitably be rejected as U.S. propaganda by both 
the Iranian regime and by its people as a predictable attack on 
the country's government by the United States.
    The true intent of the legislation is to gin up prospects 
of reputational risks for companies that might seek to do 
legitimate business with Iran. For this reason, the bill would 
be a strategic mistake. The report would undoubtedly be seized 
upon by Iran as an intentional effort to discourage 
international investment in Iran, which would be viewed by 
Iran--and likely by the major world powers who joined us in the 
JCPOA as well--as a violation of the expressed U.S. commitment 
under the nuclear deal not to interfere with the full 
realization of the relief provided to Iran under the accord. In 
fact, when the House considered nearly identical legislation 
last Congress, the Obama White House issued a veto threat, 
noting, in part, the negative impact the measure could have on 
the ``continued viability'' of the JCPOA.
    In light of the bill's limited practical utility; its 
failure to meet its own stated objectives; its diversion of 
critical resources away from Treasury investigations; the 
report's lack of usefulness as a compliance tool; and the 
negative impact the legislation would have on the continued 
viability of the nuclear deal, which to date is widely viewed 
as a success, we oppose this bill.

                                   Maxine Waters.
                                   Michael E. Capuano.
                                   Vicente Gonzalez.
                                   Joyce Beatty.
                                   Wm. Lacy Clay.
                                   Daniel T. Kildee.
                                   Keith Ellison.
                                   Al Green.
                                   Gregory W. Meeks.